[Federal Register Volume 67, Number 17 (Friday, January 25, 2002)]
[Notices]
[Pages 3745-3746]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-1900]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 25371; 812-12656]


Wells Fargo Funds Management LLC and Wells Fargo Funds Trust; 
Notice of Application

January 18, 2002.
AGENCY: Securities and Exchange Commission (``SEC'' or ``Commission'').

ACTION: Notice of application under section 6(c) of the Investment 
Company Act of 1940 (the ``Act'') requesting an exemption from section 
12(d)(3) of the Act.

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    Summary of the Application: Applicants request an order to permit a 
registered open-end management investment company to: (a) Acquire 
securities of an entity involved in securities-related activities in 
connection with a merger with another non-affiliated registered open-
end management investment company and; (b) continue to hold the 
securities for up to two years to effect their orderly liquidation 
following the merger.
    Filing Dates: The application was filed on October 9, 2001, and 
amended on January 7, 2002. Applicants have agreed to file an amendment 
to the application during the notice period, the substance of which is 
reflected in this notice.
    Hearing or Notification of Hearing: An order granting the 
application will be issued unless the SEC orders a hearing. Interested 
persons may request a hearing by writing to the SEC's Secretary and 
serving applicants with a copy of the request, personally or by mail. 
Hearing requests should be received by the SEC by 5:30 p.m. on February 
11, 2002, and should be accompanied by proof of service on applicants 
in the form of an affidavit or, for lawyers, a certificate of service. 
Hearing requests should state the nature of the writer's interest, the 
reason for the request, and the issues contested. Persons who wish to 
be notified of a hearing may request notification by writing to the 
SEC's Secretary.

ADDRESSES: Secretary, SEC, 450 Fifth Street, NW, Washington, DC 20549-
0609. Applicants, 525 Market Street, 12th Floor, San Francisco, CA 
94105.

For Further Information Contact: Bruce R. MacNeil, Senior Counsel, at 
(202) 942-0634, or Nadya B. Roytblat, Assistant Director, at (202) 942-
0564 (Office of Investment Company Regulation, Division of Investment 
Management).

Supplementary Information: The following is a summary of the 
application. The complete application may be obtained for a fee at the 
SEC's Public Reference Branch, 450 Fifth Street, NW, Washington, DC 
20549-0102 (telephone (202) 942-8090).

Applicants' Representations

    1. Wells Fargo Funds Trust, a Delaware business trust, is 
registered under the Act as an open-end management investment company 
and consists of multiple series, including Wells Fargo Specialized 
Financial Services Fund (the ``Acquiring Fund''). Wells Fargo Funds 
Management, LLC (``WFFM''), a Delaware limited liability company, is an 
investment adviser registered under the Investment Advisers Act of 1940 
and is an indirect wholly owned subsidiary of Wells Fargo & Company 
(``Wells Fargo''), a publicly-traded Delaware corporation, whose 
principal businesses are retail and commercial banking and providing 
financial services. Although a significant majority of Wells Fargo's 
annual revenues derive from its core banking business, Wells Fargo may 
also be deemed to be engaged in ``securities related activities,'' as 
defined by rule 12d3-1 under the Act.
    2. SIFE Trust Fund (the ``Acquired Fund,'' and together with the 
Acquiring Fund, the ``Funds'') is registered under the Act as an open-
end management investment company. The Acquired Fund has investment 
objectives and policies substantially similar to the Acquiring Fund and 
has been in continuous operation since July 2, 1962. SIFE, a California 
corporation, currently acts as investment adviser to the Acquired Fund. 
Pursuant to an Agreement and Plan of Reorganization, SIFE is expected 
to merge with and into a wholly-owned subsidiary of Wells Fargo on 
February 22, 2002. In addition, in February, 2002, the Acquired Fund 
will transfer all of its assets and liabilities to the Acquiring Fund 
in exchange for shares of the Acquiring Fund (the ``Reorganization''). 
Upon the effectiveness of the Reorganization, WFFM will act as 
investment adviser to the Acquiring Fund.
    3. Between May, 1989, and September, 1999, the Acquired Fund made 
14 separate purchases of Wells Fargo stock totaling 680,000 shares, in 
compliance with the Act and the rules thereunder. Each purchase was 
made on the open market at prices ranging from $4.57 per share to 
$44.34 per share, at a total cost of $19,774,452. All such purchases 
were made prior to the time that Wells Fargo and SIFE began negotiating 
the purchase of SIFE by Wells Fargo. The Acquired Fund currently holds 
500,000 shares of Wells Fargo stock equal to approximately 3% of its 
total net assets and these shares represents an unrealized gain to the 
Acquired Fund of $8,844,244 (the ``Wells Fargo Position''). In 
connection with the Reorganization, the Acquired Fund will transfer the 
Wells Fargo Position to the Acquiring Fund (the ``Transfer''). The 
Reorganization is expected to qualify as a tax-free reorganization 
under the Internal Revenue Code, and accordingly, the tax basis of all 
securities holdings and other

[[Page 3746]]

assets of the Acquired Fund will be transferred to the Acquiring Fund.
    4. Each Fund's board of trustees (``Board''), including a majority 
of the trustees who are not ``interested persons,'' as defined in 
section 2(a)(19) of the Act, approved the Reorganization and concluded 
that the Reorganization was in the best interest of the respective 
Fund. In approving the Reorganization, each Board considered the Wells 
Fargo Position. To effect the Reorganization, a shareholder meeting of 
the Acquired Fund's shareholders will be held on or about January 31, 
2002. A proxy statement soliciting shareholder approval, which 
discussed the Wells Fargo Position, was mailed in November, 2001.

Applicants' Legal Analysis

    1. Section 12(d)(3) of the Act, in relevant part, prohibits a 
registered investment company from purchasing or otherwise acquiring 
any security issued by any person who is a broker, dealer, investment 
adviser, or engaged in the business of underwriting. Rule 12d3-1 under 
the Act exempts certain transactions from the prohibitions of section 
12(d)(3) if specified conditions are met. Rule 12d3-1(c) provides that 
the exemption provided by the rule is not available when the issuer of 
the securities is the investment company's investment adviser, 
promoter, or principal underwriter, or an affiliated person thereof.
    2. Applicants state that because Wells Fargo is an affiliated 
person of WFFM, the Acquiring Fund's investment adviser, the Transfer 
and the Acquiring Fund's continued holding of the Wells Fargo Position 
would not meet the conditions of rule 12d3-1(c).\1\ Applicants request 
relief from section 12(d)(3) to permit the Acquiring Fund to effect the 
Transfer and the continued holding for up to two years of the Wells 
Fargo Position following the Reorganization in order to permit the 
Acquiring Fund to effect its orderly liquidation.
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    \1\ See Investment Company Act Release No. 3542. (Sep. 21, 
1962).
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    3. Section 6(c) of the Act authorizes the SEC to exempt persons or 
transactions from the provisions of the Act to the extent that the 
exemption is necessary or appropriate in the public interest and 
consistent with the protection of investors and the purposes fairly 
intended by the policies and provisions of the Act. Applicants state 
that the requested relief meets this standard.
    4. Applicants state that the relief is warranted because none of 
the abuses that section 12(d)(3) was intended to prevent are present in 
the instant situation and the two-year disposition period will permit 
the Acquiring Fund to maximize the realization of gain on the orderly 
sale of the Wells Fargo Position while minimizing the tax effects of 
the disposition. Applicants also state that the Acquired Fund obtained 
the Wells Fargo Position in compliance with the Act and the rules 
thereunder.

Applicants' Condition

    Applicants agree that any order granting the requested relief will 
be subject to the following condition:
    Applicants will seek to liquidate the Wells Fargo Position as soon 
as possible, consistent with the maximization of shareholder return and 
the best interests of the Acquiring Fund, and in any case, within two 
years of the date of the Reorganization.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 02-1900 Filed 1-24-02; 8:45 am]
BILLING CODE 8010-01-P